Licence Raj

The license raj, was considered to be dismantled in 1990, when a Macroeconomic crisis forced India to usher in economic reforms and dismantle the licensing regulations in order to attract Foreign Direct Investment and private businesses. Despite the ongoing reforms, India still ranks in the bottom quartile of Developing Nations in terms of the ease of doing business and compared to China , the average time taken to secure the clearances for a Startup or to invoke Bankruptcy , is much greater.

HISTORY

The architect of the system of license-raj was Jawaharlal Nehru , India's first Prime Minister . Inspired by the economy in Soviet Union , he was determined to implement the model in India. Nehru was also an admirer of Stalin , and initiated steps for converting India into a Socialistic pattern of society. This sovereign aspiration of the people of India was also articulated in the Constitution Of India , the Preamble of which declares the aspiration of ''the people of India to solemnly resolve to constitute India into a Sovereign Socialist Secular Democratic Republic''.

ORIGIN

The term was coined by Rajaji , the founder of Swatantra Party . It is also known as license-permit raj, license-permit-quota raj or the permit-raj.

PLANNING

The key characteristic of the license raj is a Planning Commission , that centrally administers the economy of the country. As a Command Economy , India has Five-year Plans on the lines of the Five Year Plans in Stalinist Soviet Union.

CURRENT STATUS

The economic liberalisation of 1991 has cut down much of the Red Tape , deregulated and opened up most sectors, even to foreign investors, in most cases.

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Licence Raj